Accelerated Annualized Recurring Revenue (ARR) Growth Highlights Autodesk's Second Quarter Results
SAN RAFAEL, Calif., Aug. 23, 2018 /PRNewswire/ — Autodesk, Inc. (NASDAQ: ADSK) announced its financial results for the second quarter of fiscal 2019.
**Second Quarter Fiscal 2019**
- Subscription plan ARR reached $1.68 billion, marking an 115% increase compared to the same period last year, and 111% on a constant currency basis. Under the previous revenue accounting standard, ASC 605, subscription plan ARR was $1.66 billion, reflecting an 112% increase.
- Total ARR totaled $2.35 billion, representing a 28% increase from the second quarter of the previous year, and 27% on a constant currency basis. Under ASC 605, total ARR was $2.32 billion, an increase of 27% over the same period.
- Subscription plan subscriptions increased by 290,000 from the first quarter of fiscal 2019 to 2.86 million at the end of the second quarter. This growth was supported by 117,000 maintenance subscribers transitioning to product subscriptions through the maintenance-to-subscription (M2S) program.
- Total subscriptions rose by 119,000 from the first quarter of fiscal 2019 to 3.94 million at the end of the second quarter.
- Deferred revenue stood at $1.80 billion, up 1% compared to the second quarter of the previous year. Total deferred revenue, including unbilled deferred revenue, was $2.21 billion, a 20% increase from the same period last year. Under ASC 605, total deferred revenue was $2.28 billion, up approximately 24%.
- Revenue amounted to $612 million, a 22% increase from the second quarter of the previous year, and 21% on a constant currency basis. Under ASC 605, revenue was $611 million, an increase of 22%.
- Billings reached $605 million, up 27% from the second quarter of the previous year. Under ASC 605, billings were $592 million, an increase of 24%.
- Total GAAP spend (cost of revenue plus operating expenses) was $636 million, up 4% compared to the second quarter of the previous year, and 3% on a constant currency basis. Excluding ASC 340-40, total GAAP spend was $626 million, an increase of 3%.
- Total non-GAAP spend was $556 million, up 5% from the second quarter of the previous year, and 4% on a constant currency basis. A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables. Excluding ASC 340-40, total non-GAAP spend was $546 million, an increase of 3%.
- GAAP diluted net loss per share was $(0.18), compared to $(0.66) in the second quarter of the previous year. Under ASC 605 and excluding ASC 340-40, GAAP diluted net loss per share was $(0.12).
- Non-GAAP diluted earnings per share was $0.19, compared to a non-GAAP diluted net loss per share of $(0.11) in the second quarter of the previous year. Under ASC 605 and excluding ASC 340-40, non-GAAP diluted net income per share was $0.23.
For definitions, please refer to the Glossary of Terms later in this document.
“Broad-based strength in customer demand and continued execution across our business helped accelerate growth in ARR and annualized revenue per subscription (ARPS),†said Andrew Anagnost, Autodesk president and CEO. “A superior user experience is motivating new customers to turn to Autodesk subscription and cloud offerings, and we continue to see a steady stream of existing maintenance customers migrating to subscription.â€
“We posted strong results for several key metrics including billings, revenue, total deferred revenue, and earnings,†said Scott Herren, Autodesk CFO. “We also generated positive cash flow from operating activities and expect to be cash flow positive for the year. We’re pleased with our performance in the first half of the fiscal year and are confident in our ability to drive results for the remainder of the year.â€
**Second Quarter Operational Overview**
Subscription plan ARR was $1.68 billion, an increase of 115 percent compared to the second quarter last year as reported, and 111 percent on a constant currency basis. Subscription plan ARR includes $342 million related to the maintenance-to-subscription program. Maintenance plan ARR was $666 million, a decrease of 36 percent compared to the second quarter last year as reported, and on a constant currency basis. Total ARR was $2.35 billion, an increase of 28 percent compared to the second quarter last year as reported, and 27 percent on a constant currency basis.
Subscription plan subscriptions (product, enterprise business agreements, and cloud) were 2.86 million, a net increase of 290,000 from the first quarter of fiscal 2019, led by new product subscriptions and 117,000 product subscriptions that migrated from maintenance plan subscriptions. Maintenance plan subscriptions were 1.07 million, a net decrease of 172,000 from the first quarter of fiscal 2019, which includes the 117,000 that migrated to product subscription. Total subscriptions were 3.94 million, a net increase of 119,000 from the first quarter of fiscal 2019.
Total recurring revenue in the second quarter was 96 percent of total revenue, compared to 91 percent of total revenue in the second quarter last year.
Revenue in the Americas was $248 million, an increase of 16 percent compared to the second quarter last year as reported, and 15 percent on a constant currency basis. Under ASC 605, revenue in the Americas was $249 million, an increase of 16 percent compared to the second quarter last year. Revenue in EMEA was $248 million, an increase of 25 percent compared to the second quarter last year as reported, and 22 percent on a constant currency basis. Under ASC 605, revenue in EMEA was $246 million, an increase of 24 percent compared to the second quarter last year. Revenue in APAC was $116 million, an increase of 31 percent compared to the second quarter last year as reported, and 30 percent on a constant currency basis. Under ASC 605, revenue in APAC was $115 million, an increase of 30 percent compared to the second quarter last year.
**Business Outlook**
The following statements are forward-looking based on current expectations and assumptions, and involve risks and uncertainties. Autodesk’s business outlook for the third quarter and full year fiscal 2019 assumes, among other things, a continuation of the current economic environment and foreign exchange currency rate environment. A reconciliation between the fiscal 2019 GAAP and non-GAAP estimates is provided below or in the tables following this press release.
Starting the first quarter of fiscal 2019, Autodesk reports its results under two new accounting standards. Revenue is now reported under Accounting Standard Codification (“ASCâ€) 606 and sales commissions are now reported under ASC 340-40. We did not recast historical information as we elected to use the modified retrospective transition method. These new standards did not result in a change in timing or amount of revenue recognized for the majority of our maintenance and subscription offerings, though there may be immaterial shifts in the timing of revenue recognition due to the elimination of VSOE requirements and other differences between the standards. However, we are required to capitalize and amortize sales commissions under the new standards. ASC 606 and ASC 340-40 do not affect cash flows or subscriptions.
**Third Quarter Fiscal 2019 Guidance Metrics**
- Revenue: $635 – $645 million (23% – 25%)
- EPS GAAP: $(0.09) – $(0.05)
- EPS non-GAAP: $0.24 – $0.28
**Full Year Fiscal 2019 Guidance Metrics**
- Billings: $2,580 – $2,640 million (16% – 19%)
- Revenue: $2,485 – $2,505 million (21% – 22%)
- GAAP spend growth: (2.5)% – (1.5)%
- Non-GAAP spend growth: 1 – 2%
- EPS GAAP: $(0.59) – $(0.51)
- EPS non-GAAP: $0.87 – $0.95
- Net subscription additions: 500k – 550k
- Total ARR growth: 28% – 30%
The third quarter and full year fiscal 2019 outlook assume a projected annual effective tax rate of (117) percent and 19 percent for GAAP and non-GAAP results, respectively. Assumptions for the annual effective tax rate are regularly evaluated and may change based on the projected geographic mix of earnings. At this stage of the business model transition, small shifts in geographic profitability significantly impact the annual effective tax rate.
**Earnings Conference Call and Webcast**
Autodesk will host its second quarter conference call today at 5:00 p.m. ET. The live broadcast can be accessed at http://www.autodesk.com/investor. Supplemental financial information and prepared remarks for the conference call will be posted to the investor relations section of Autodesk’s website simultaneously with this press release.
A replay of the broadcast will be available at 7:00 p.m. ET at http://www.autodesk.com/investor. This replay will be maintained on Autodesk’s website for at least 12 months.
**Glossary of Terms**
- **Annualized Recurring Revenue (ARR):** Represents the annualized value of our average monthly recurring revenue for the preceding three months. “Maintenance plan ARR†captures ARR relating to traditional maintenance attached to perpetual licenses. “Subscription plan ARR†captures ARR relating to subscription offerings.
- **Annualized Revenue Per Subscription (ARPS):** Is calculated by dividing our annualized recurring revenue by the total number of subscriptions.
- **Billings:** Total revenue plus the net change in deferred revenue from the beginning to the end of the period.
- **Cloud Service Offerings:** Represents individual term-based offerings deployed through web browser technologies or in a hybrid software and cloud configuration.
- **Constant Currency (CC) Growth Rates:** We attempt to represent the changes in the underlying business operations by eliminating fluctuations caused by changes in foreign currency exchange rates as well as eliminating hedge gains or losses recorded within the current and comparative periods.
- **Enterprise Business Agreements (EBAs):** These represent programs providing enterprise customers with token-based access or a fixed maximum number of seats to a broad pool of Autodesk products over a defined contract term.
- **Free Cash Flow:** Cash flow from operating activities minus capital expenditures.
- **Maintenance Plan:** Our maintenance plans provide our customers with a cost-effective and predictable budgetary option to obtain the productivity benefits of our new releases and enhancements when and if released during the term of their contracts.
- **Other Revenue:** Consists of revenue from consulting, training and other services, and is recognized over time as the services are performed.
- **Product Subscription:** Provides customers the most flexible, cost-effective way to access and manage 3D design, engineering, and entertainment software tools.
- **Recurring Revenue:** Consists of the revenue for the period from our traditional maintenance plans and revenue from our subscription plan offerings.
- **Subscription Plan:** Comprises our term-based product subscriptions, cloud service offerings, and enterprise business agreements (EBAs).
- **Subscription Revenue:** Includes subscription fees from product subscriptions, cloud service offerings, and enterprise business agreements (EBAs).
- **Total Deferred Revenue:** Is calculated by adding together total short-term, long-term, and unbilled deferred revenue.
- **Total Subscriptions:** Consists of subscriptions from our maintenance plans and subscription plan offerings that are active and paid as of the fiscal year end date.
- **Unbilled Deferred Revenue:** Unbilled deferred revenue represents contractually stated or committed orders under early renewal and multi-year billing plans for subscription, services, license and maintenance for which the associated deferred revenue has not been recognized.
**Safe Harbor Statement**
This press release contains forward-looking statements that involve risks and uncertainties, including statements in the paragraphs under “Business Outlook†above, statements regarding ARR growth acceleration and maintenance to subscription conversions, other statements about our short-term and long-term targets, statements regarding the impacts and results of our business model transition, expectations regarding the transition of product offerings to subscription and acceptance by our customers and partners of subscriptions, expectations for billings, revenue, subscriptions, spend, EPS and ARR, statements about the impact of ASC 606 and ASC 340-40, and other statements regarding our strategies, market and product positions, performance and results.
Further information on potential factors that could affect the financial results of Autodesk are included in Autodesk’s Annual Report on Form 10-K for the fiscal year ended January 31, 2018 and Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2018, which are on file with the U.S. Securities and Exchange Commission. Autodesk disclaims any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
**About Autodesk**
Autodesk makes software for people who make things. If you’ve ever driven a high-performance car, admired a towering skyscraper, used a smartphone, or watched a great film, chances are you’ve experienced what millions of Autodesk customers are doing with our software. Autodesk gives you the power to make anything. For more information visit autodesk.com or follow @autodesk.
*Autodesk, AutoCAD, AutoCAD LT, BIM 360 and Fusion 360 are registered trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. All other brand names, product names or trademarks belong to their respective holders. Autodesk reserves the right to alter product and service offerings, and specifications and pricing at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document.*
*© 2018 Autodesk, Inc. All rights reserved.*
JIS H3000
DIN17664,DIN1785,
**Second Quarter Fiscal 2019**
- Subscription plan ARR reached $1.68 billion, marking an 115% increase compared to the same period last year, and 111% on a constant currency basis. Under the previous revenue accounting standard, ASC 605, subscription plan ARR was $1.66 billion, reflecting an 112% increase.
- Total ARR totaled $2.35 billion, representing a 28% increase from the second quarter of the previous year, and 27% on a constant currency basis. Under ASC 605, total ARR was $2.32 billion, an increase of 27% over the same period.
- Subscription plan subscriptions increased by 290,000 from the first quarter of fiscal 2019 to 2.86 million at the end of the second quarter. This growth was supported by 117,000 maintenance subscribers transitioning to product subscriptions through the maintenance-to-subscription (M2S) program.
- Total subscriptions rose by 119,000 from the first quarter of fiscal 2019 to 3.94 million at the end of the second quarter.
- Deferred revenue stood at $1.80 billion, up 1% compared to the second quarter of the previous year. Total deferred revenue, including unbilled deferred revenue, was $2.21 billion, a 20% increase from the same period last year. Under ASC 605, total deferred revenue was $2.28 billion, up approximately 24%.
- Revenue amounted to $612 million, a 22% increase from the second quarter of the previous year, and 21% on a constant currency basis. Under ASC 605, revenue was $611 million, an increase of 22%.
- Billings reached $605 million, up 27% from the second quarter of the previous year. Under ASC 605, billings were $592 million, an increase of 24%.
- Total GAAP spend (cost of revenue plus operating expenses) was $636 million, up 4% compared to the second quarter of the previous year, and 3% on a constant currency basis. Excluding ASC 340-40, total GAAP spend was $626 million, an increase of 3%.
- Total non-GAAP spend was $556 million, up 5% from the second quarter of the previous year, and 4% on a constant currency basis. A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables. Excluding ASC 340-40, total non-GAAP spend was $546 million, an increase of 3%.
- GAAP diluted net loss per share was $(0.18), compared to $(0.66) in the second quarter of the previous year. Under ASC 605 and excluding ASC 340-40, GAAP diluted net loss per share was $(0.12).
- Non-GAAP diluted earnings per share was $0.19, compared to a non-GAAP diluted net loss per share of $(0.11) in the second quarter of the previous year. Under ASC 605 and excluding ASC 340-40, non-GAAP diluted net income per share was $0.23.
For definitions, please refer to the Glossary of Terms later in this document.
“Broad-based strength in customer demand and continued execution across our business helped accelerate growth in ARR and annualized revenue per subscription (ARPS),†said Andrew Anagnost, Autodesk president and CEO. “A superior user experience is motivating new customers to turn to Autodesk subscription and cloud offerings, and we continue to see a steady stream of existing maintenance customers migrating to subscription.â€
“We posted strong results for several key metrics including billings, revenue, total deferred revenue, and earnings,†said Scott Herren, Autodesk CFO. “We also generated positive cash flow from operating activities and expect to be cash flow positive for the year. We’re pleased with our performance in the first half of the fiscal year and are confident in our ability to drive results for the remainder of the year.â€
**Second Quarter Operational Overview**
Subscription plan ARR was $1.68 billion, an increase of 115 percent compared to the second quarter last year as reported, and 111 percent on a constant currency basis. Subscription plan ARR includes $342 million related to the maintenance-to-subscription program. Maintenance plan ARR was $666 million, a decrease of 36 percent compared to the second quarter last year as reported, and on a constant currency basis. Total ARR was $2.35 billion, an increase of 28 percent compared to the second quarter last year as reported, and 27 percent on a constant currency basis.
Subscription plan subscriptions (product, enterprise business agreements, and cloud) were 2.86 million, a net increase of 290,000 from the first quarter of fiscal 2019, led by new product subscriptions and 117,000 product subscriptions that migrated from maintenance plan subscriptions. Maintenance plan subscriptions were 1.07 million, a net decrease of 172,000 from the first quarter of fiscal 2019, which includes the 117,000 that migrated to product subscription. Total subscriptions were 3.94 million, a net increase of 119,000 from the first quarter of fiscal 2019.
Total recurring revenue in the second quarter was 96 percent of total revenue, compared to 91 percent of total revenue in the second quarter last year.
Revenue in the Americas was $248 million, an increase of 16 percent compared to the second quarter last year as reported, and 15 percent on a constant currency basis. Under ASC 605, revenue in the Americas was $249 million, an increase of 16 percent compared to the second quarter last year. Revenue in EMEA was $248 million, an increase of 25 percent compared to the second quarter last year as reported, and 22 percent on a constant currency basis. Under ASC 605, revenue in EMEA was $246 million, an increase of 24 percent compared to the second quarter last year. Revenue in APAC was $116 million, an increase of 31 percent compared to the second quarter last year as reported, and 30 percent on a constant currency basis. Under ASC 605, revenue in APAC was $115 million, an increase of 30 percent compared to the second quarter last year.
**Business Outlook**
The following statements are forward-looking based on current expectations and assumptions, and involve risks and uncertainties. Autodesk’s business outlook for the third quarter and full year fiscal 2019 assumes, among other things, a continuation of the current economic environment and foreign exchange currency rate environment. A reconciliation between the fiscal 2019 GAAP and non-GAAP estimates is provided below or in the tables following this press release.
Starting the first quarter of fiscal 2019, Autodesk reports its results under two new accounting standards. Revenue is now reported under Accounting Standard Codification (“ASCâ€) 606 and sales commissions are now reported under ASC 340-40. We did not recast historical information as we elected to use the modified retrospective transition method. These new standards did not result in a change in timing or amount of revenue recognized for the majority of our maintenance and subscription offerings, though there may be immaterial shifts in the timing of revenue recognition due to the elimination of VSOE requirements and other differences between the standards. However, we are required to capitalize and amortize sales commissions under the new standards. ASC 606 and ASC 340-40 do not affect cash flows or subscriptions.
**Third Quarter Fiscal 2019 Guidance Metrics**
- Revenue: $635 – $645 million (23% – 25%)
- EPS GAAP: $(0.09) – $(0.05)
- EPS non-GAAP: $0.24 – $0.28
**Full Year Fiscal 2019 Guidance Metrics**
- Billings: $2,580 – $2,640 million (16% – 19%)
- Revenue: $2,485 – $2,505 million (21% – 22%)
- GAAP spend growth: (2.5)% – (1.5)%
- Non-GAAP spend growth: 1 – 2%
- EPS GAAP: $(0.59) – $(0.51)
- EPS non-GAAP: $0.87 – $0.95
- Net subscription additions: 500k – 550k
- Total ARR growth: 28% – 30%
The third quarter and full year fiscal 2019 outlook assume a projected annual effective tax rate of (117) percent and 19 percent for GAAP and non-GAAP results, respectively. Assumptions for the annual effective tax rate are regularly evaluated and may change based on the projected geographic mix of earnings. At this stage of the business model transition, small shifts in geographic profitability significantly impact the annual effective tax rate.
**Earnings Conference Call and Webcast**
Autodesk will host its second quarter conference call today at 5:00 p.m. ET. The live broadcast can be accessed at http://www.autodesk.com/investor. Supplemental financial information and prepared remarks for the conference call will be posted to the investor relations section of Autodesk’s website simultaneously with this press release.
A replay of the broadcast will be available at 7:00 p.m. ET at http://www.autodesk.com/investor. This replay will be maintained on Autodesk’s website for at least 12 months.
**Glossary of Terms**
- **Annualized Recurring Revenue (ARR):** Represents the annualized value of our average monthly recurring revenue for the preceding three months. “Maintenance plan ARR†captures ARR relating to traditional maintenance attached to perpetual licenses. “Subscription plan ARR†captures ARR relating to subscription offerings.
- **Annualized Revenue Per Subscription (ARPS):** Is calculated by dividing our annualized recurring revenue by the total number of subscriptions.
- **Billings:** Total revenue plus the net change in deferred revenue from the beginning to the end of the period.
- **Cloud Service Offerings:** Represents individual term-based offerings deployed through web browser technologies or in a hybrid software and cloud configuration.
- **Constant Currency (CC) Growth Rates:** We attempt to represent the changes in the underlying business operations by eliminating fluctuations caused by changes in foreign currency exchange rates as well as eliminating hedge gains or losses recorded within the current and comparative periods.
- **Enterprise Business Agreements (EBAs):** These represent programs providing enterprise customers with token-based access or a fixed maximum number of seats to a broad pool of Autodesk products over a defined contract term.
- **Free Cash Flow:** Cash flow from operating activities minus capital expenditures.
- **Maintenance Plan:** Our maintenance plans provide our customers with a cost-effective and predictable budgetary option to obtain the productivity benefits of our new releases and enhancements when and if released during the term of their contracts.
- **Other Revenue:** Consists of revenue from consulting, training and other services, and is recognized over time as the services are performed.
- **Product Subscription:** Provides customers the most flexible, cost-effective way to access and manage 3D design, engineering, and entertainment software tools.
- **Recurring Revenue:** Consists of the revenue for the period from our traditional maintenance plans and revenue from our subscription plan offerings.
- **Subscription Plan:** Comprises our term-based product subscriptions, cloud service offerings, and enterprise business agreements (EBAs).
- **Subscription Revenue:** Includes subscription fees from product subscriptions, cloud service offerings, and enterprise business agreements (EBAs).
- **Total Deferred Revenue:** Is calculated by adding together total short-term, long-term, and unbilled deferred revenue.
- **Total Subscriptions:** Consists of subscriptions from our maintenance plans and subscription plan offerings that are active and paid as of the fiscal year end date.
- **Unbilled Deferred Revenue:** Unbilled deferred revenue represents contractually stated or committed orders under early renewal and multi-year billing plans for subscription, services, license and maintenance for which the associated deferred revenue has not been recognized.
**Safe Harbor Statement**
This press release contains forward-looking statements that involve risks and uncertainties, including statements in the paragraphs under “Business Outlook†above, statements regarding ARR growth acceleration and maintenance to subscription conversions, other statements about our short-term and long-term targets, statements regarding the impacts and results of our business model transition, expectations regarding the transition of product offerings to subscription and acceptance by our customers and partners of subscriptions, expectations for billings, revenue, subscriptions, spend, EPS and ARR, statements about the impact of ASC 606 and ASC 340-40, and other statements regarding our strategies, market and product positions, performance and results.
Further information on potential factors that could affect the financial results of Autodesk are included in Autodesk’s Annual Report on Form 10-K for the fiscal year ended January 31, 2018 and Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2018, which are on file with the U.S. Securities and Exchange Commission. Autodesk disclaims any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
**About Autodesk**
Autodesk makes software for people who make things. If you’ve ever driven a high-performance car, admired a towering skyscraper, used a smartphone, or watched a great film, chances are you’ve experienced what millions of Autodesk customers are doing with our software. Autodesk gives you the power to make anything. For more information visit autodesk.com or follow @autodesk.
*Autodesk, AutoCAD, AutoCAD LT, BIM 360 and Fusion 360 are registered trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. All other brand names, product names or trademarks belong to their respective holders. Autodesk reserves the right to alter product and service offerings, and specifications and pricing at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document.*
*© 2018 Autodesk, Inc. All rights reserved.*The Mainly products including Seamless brass tubes,Copper round tubes,Copper alloy tubes,
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